Perera v. Zainudeen
Present: Sansoni, J., and Sinnetamby, 3.
J. E. PERERA and another. Appellants, and M. M. ZAINUDEEN,
8. C. 355—D. C. Colombo, 41,477/M.
Sale of sweep tickets—Term, of prescription for recovery of value—Meaning ofexpressions “ chose in action ”and “ goods ”—Sale of Goods Ordinance, s. 59—Prescription Ordinance, ss. 8, 10.
The plaintiffs, who were the trustees of the Galle Gymkhana Club, sold tothe defendant, a member of the club, 20,000 sweep tickets priced at fifty centseach and sought, in the present action, to recover the value of the tickets. Thedefendant pleaded prescription.
Held, that the sale was the sale of a chose in action and that section 10, andnot section 8, of the Prescription Ordinance was applicable. Section 8 appliedonly to goods which are capable of being physically delivered and not to thesale of incorporeal things such as a “ chose in action ”. In the latter case,section 10 applies and the period of prescription would be three years.
SINriTSTAMBY, J,—Per era v. Zainudeah
PEAL from & judgment of the District Court, Colombo.
S.V. Perera, Q.C., with P. Navaratnarajah and 8. Sfuirvananda, for theplaintiffs – appellao ts.
JRanganathan, with E. A. Q. de Silva, for the defendant-respondent.
Cur. adv. vult.
March 12, 1962. Sihitjjtamby, J.—
The plaintiffs who are the trustees of the Gallo Gymkhana Club sold tothe defendant, a member of the club. 20,000 sweep tickets priced at50 cents each on 25th February, 1955, which is the day on which the ticketswere delivered to him. The plaintiffs in this action sought to recover asum of Rs. 11,250 as the value of the said tickets less discount. Thedefendant pleaded prescription and the learned trial judge held with. him.The present appeal was preferred against this decision.
The defendant's contention is that the action is an action for goodssold and delivered within the meaning of section 8 of the PrescriptionOrdinance. The appellant on the other hand contends that it was not acase of goods sold and delivered, but that the action is based on a causeof action not provided for expressly in the Prescription Ordinance andthat Section 10 which prescribes a term of three years is applicable. Thelearned trial judge came to the conclusion that the sale in this case wasthe sale of a chose in action and that Section 8 applied inasmuch as theword “ goods ” in the Sale of Goods Ordinance includes “ choses inaction ”. He based his finding on a consideration of the definition of theterm “ goods ” in Section 59 of the Sale of Goods Ordinance after com-paring it with the definitions in the English Act and in the Indian ContractAct. In the English Act, choses in action are expressly excluded. TheIndian Act, while excluding choses in action, includes stocks and shares.The Ceylon Act on the other hand defines the word “ Goods ” in thefollowing terms :—
f! Goods include all movables except money. The term includesgrowing crops and things attached to or forming part of the land whichare agreed to be severed before sale or under the contract of sale ”.
I am in agreement with the conclusion reached by the learned trialjudge that the sale of the sweep tickets in this case was the sale of achose in action, namely, the sale of a right on the part of the buyer toreceive a prize from the seller on the happening of a certain event, thesweep ticket merely providing evidence of that contract of sale. Thecondition on which the buyer was entitled to receive a prize was con-tingent on one of his tickets drawing the prize in a draw that was to besubsequently held[. The learned trial judge, however, thereafter, wenton to hold that Section 8 of the Prescription Ordinance was applicablefor the reason that the contract in this case was a contract for the sale of
SINTOSTAMBY, J.—Perera v. Zainudeen
goods. It must, however, be remembered that the Prescription Ordin-ance came into existence long before the Sale of Goods Ordinance and itwould not be quite appropriate to adopt the definition of the word" goods ” in the Sale of Goods Ordinance in order to construe the meaning"ofthe term “ goods sold and delivered ” in the Prescription Ordinance.
The learned Counsel for the respondent further contended that in thiscase there was no sale of a chose in action. He submitted that for achose in action to come into existence there should be three parties.First there should be the two principal persons, one of whom has a rightof action against the other, and it is only on the assignment of that rightthat a chose in action comes into existence. He also submitted thatthere can be no sale of something which is not in existence and in theownership of the seller at the time of the sale. With these propositions,however, I do not agree.
A chose in action is distinguishable from a chose in possession or athing in possession : the expression “ chose in action ” means “ a thingrecoverable by action ” as contrasted with a chose in possession namely,a thing of which a person has not only ownership but also actual physicalpossession. One may, therefore, have a right to recover by actionsomething which at the time has no physical existence. In such a case,there exists a chose in action although there are only two parties to it.In Jones v. Carter 1 the plaintiff, the holder of a ticket in the Derby lottery,claimed as the winner but he was not the person to whom the ticket wasissued by the defendant. The court held that there was a chose in actionas between the defendant and the original purchaser but dismissed theplaintiff’s action on the ground that the assignment to the plaintiff wasnot a valid assignment. At the time the case was decided, counselinformed us, the law had not recognised the right of an assignee to sue inhis own name. The court, nevertheless, held that the purchaser of theticket was the owner of a chose in action which he purported to assign.In Knight v. Barber 2 an order for 50 shares in a company was reduced towriting. The question that arose for decision was whether in the absenceof correct stamping of the written document, oral evidence could be givenof the parol agreement. The Stamp Act exempted from stamp dutyf ‘ any agreement made for or relating to the sale of any goods, wares ormerchandise.” Counsel did not contend that the sale of shares which wasadmittedly the sale of a chose in action was the sale of “ goods ” withinthe meaning of the Stamp Act, but only contended that it was the sale of“ merchandise ” and, therefore, not liable to stamp duty. The court heldthat it was not a sale of merchandise and that it was no more than anagreement to transfer an interest in the capital of the company and thatit did not come within the description of “ goods, wares or merchandise.”
In the present case, what was it that the member bought from the club 1Surely not pieces of paper on which certain words were printed : for, if so,
1 115 English Rapts. Q. B. 325.
2 153 Eng. Rents, p. 1101.
SDSTN15TAMIBY, J.—Persro v. 2iainudaen
on delivery of the pieces of printed paper the contract would have beencompleted and the defendant would have h&dhso further claim against theclub. If this contention of the defendant that the goods consistedmerely of pieces of paper is correct, there was a sale completed bydelivery and the buyer' would not be entitled to recover anything morefrom the seller even if one of his tickets drew a prise. What was sold inthis case was the right of the holder of any one of those tickets to receivea prise on the happening of a certain event. That is the sense in whichall parties understood the transaction. It is to be noted that theexpression used in the Prescription Ordinance prescribes one year as theperiod of prescription in the case of “ goods sold and delivered ” and notmerely “ goods sold For section 8 to apply, there must be a deliveryof goods which are capable of physical delivery. What kind of goods arecapable of such delivery ? Clearly, the expression is intended to coveronly goods in existence and material in nature, that is to say, goods whichare “ corporeal ” and not goods which are “ incorporeal ”. Actualdelivery is not possible of a chose in action and the term “ goods ” used inSection 8 of the Prescription Ordinance must be limited to a thing in theactual physical possession of the seller.
In my view, therefore, section 8 of the Prescription Ordinance onlyapplies to “ goods which are capable of being physically delivered ” andnot to the sale of incorporeal things such as a chose in action. In thelatter case, Section 10 applies and the period of prescription would bethree years.
The appeal is accordingly allowed and judgment entered for theplaintiff as prayed for with costs both here and in the court below.
Sastsoni, J.—I agree.
J. E. PERERA and another, Appellants, and M. M. ZAINUDEEN, Respondent